People say that theory is not practical, and that, my friend, is not a criticism, but a truism. Why? Because theory is the production of observation, thought and analysis that will weed out many indirect correlations and emphasize the ones that matter the most to the study and interest. It is not different from learning Taekwondo or Karate or any other martial arts. You have to start from the very basic of the basics. First, you would be taught “Kata” or “Form” of the art, which to beginners are simply dancing around like a fool. You should know you cannot follow each and every step of Kata in real fight. If you do think you can do that, trust me, don’t. Kata, I believe, is intended to build within you the foundation of the martial art, its basic forms and nature, so once you are well-acquainted with them, you may then engage in the real action.
Likewise, it is not a surprise that all Economic theories are pretty much taught to you for the same purpose. The more you learn, the more your knowledge base expands, the more flexible you become, the deeper you can think, the more critical thinking you have, the more accurate your deduction becomes. There is no shortcut.
Again and again, I always try to include this in every article, though slightly altered from one to the next, but still convey the same meaning nonetheless that Economics is broad in width and profound in depth. Forgive me if this sounds like I overrate Economics, but as far as I am concerned, the former statement I made is true to its core.
That is why by the time you have mastered a bunch of the fundamental economic concepts/theories, you will be challenged and haunted by the fact that all of them make sense, but in the real world application, with vast possibilities and unpredictability while the margin of error is never getting any bigger, the likelihood that dependence on an economic theory and/or theories alone to explain and forecast the climate change of the world of economy is unsustainable and inaccurate has always been inducing fear and loss of credibility for the economic discipline again and again for a great number of people.
However, one must never forget that theories are there to be employed, not solely, but in conjunction with real observation and ongoing analysis of the world, the context. That is why, in the study of economics, reading off your textbooks, attending lecture and listening to your professors are not enough to produce a well-rounded understanding of economics. My advice to you is that once you think you have sufficient knowledge of the text, start looking around for hands-on experience, real time and real world observation, or at least, read reports that convey those experiences to you. Only by then can you be sure of the usefulness of your knowledge.
If anyone tells you that theories are useless, they probably mean following only the theories you have learnt is stupid. If they mean theories themselves are pointless, those people probably do not have that much understanding of the world of knowledge, the academic realm.
You must understand that the world has become what it is today thanks to the many theories, not limited to Economics, layer by layer built upon one another, in which the latter is an upgrade of the former. As the pool of knowledge is expanding so is the world evolving to a more complex form. But note that these two, I believe, are strongly correlated. Theories were turned into real practice, and the world evolved as a result, which led to more theories be created, and in turn, resulted in more advanced form of the world.
For the same reason, economic theories have been extracted from the understanding of the real world, and they have been used extensively in shaping a better world. Their visibility, however, might not be apparent to those who do not seek the knowledge. Regardless, they remains to be a part of the vital force the drives onward the world economy and human well-being. The prosperity you witness today is not just the result of scientific evolution, but also the adoption of an effective and efficient economic system conducive to growth. If you want to know more, why not read more about economics? You will be surprised by how much you do not know, just like I was.
In economic theories, we trust.